Carbon Trading

By: Kethaki Nair

Cap- and-trade programs have been a point of contention in political and business circles for a while now. Under these programs the government will impose a restriction on the amount of pollution that is permissible and then generate permits, each with a certain pollution allowance, that total to this permissible level. These permits are distributed to industry. The key benefit of the cap-and-trade program is its ability to check pollution while maintaining market efficiency. The Lieberman-Warner Climate Security Act attempted to introduce a cap-and –trade program in the US. However, there were disagreements over how permits would be distributed and other intricacies, the bill failed in Congress. Yet many industry specialists believe that legislation enforcing some kind of cap-and-trade program will be on the books soon. In response many US-based industrial manufacturers are already looking closely at their carbon emissions.

According to a report released by Pricewaterhouse Coopers 43% of manufacturers are already implementing plans on reduce their carbon emissions and 15% are in the process of developing these plans. Industry is changing fast! And if the government follows it will be forced to change even faster. The direction the industry is moving in has created the demand for a new service, carbon trading. This essentially involves giving carbon a price and then trading it in a market, perhaps similar to the stock market. Some amount of trading is already happening in the US through the voluntary Chicago Climate Exchange and the mandatory Regional Greenhouse Gas Initiative (RGGI). Carbon trading is also booming in Europe.

While it may seem a little early to think of a career in carbon trading getting involved early can have its advantages. A word of caution: there are many who question the environmental integrity of carbon trading and are concerned about the way the industry is developing. Nonetheless it is a great emerging field to keep your eye on, and perhaps shape in the future!


Pricewaterhouse Coopers report:
http://www.pwc.com/extweb/home.nsf/docid/B08C50859881E216852574A500578A4F
NY Times Article:
http://www.nytimes.com/2008/09/16/us/16carbon.html?scp=1&sq=carbon+trading&st=nyt